NVR Authorizes $300M Share Buyback


Home building and mortgage banking company, NVR Inc. (NVR), announced the repurchase of shares worth $300 million in the open market. The share buyback will take place from time to time subject to market conditions.

Earlier, in 2012, the company authorized two buyback programs of $300 million each in Dec 2012 and Jul 2013. It has been repurchasing shares since 1994. NVR repurchased 1.6 million shares for a total price of $141 million during the recently concluded third-quarter fiscal 2013 which ended on Sep 30, 2013.

NVR operates under two business segments — Homebuilding and Mortgage Banking. The Homebuilding unit builds and sells homes under trade names like Ryan Homes, NVHomes and Fox Ridge Homes. Recently, the company is focusing on building many new houses and earning profits, as the rising demand for new homes has led to a favorable situation in the housing market.

However, inventory levels are dropping and prices are moving up. The company is, therefore, trying to build new homes into the market to maintain the required level of inventory and meet the growing demand for homes.

NVR ended the third quarter with cash and cash equivalents of $804.6 million. As  of September 30, 2013 there was no debt outstanding under the Repurchase Agreement and there were no borrowing base limitations. Despite the improving housing market, NVR carries a short-term Zacks Rank #4 (Sell), as we believe that the housing market is still in the recovery stage and the macroeconomic parameters are growing slowly.

Other Stocks to Consider

Some better-ranked stocks in the construction sector that are performing well and deserve a mention include M/I Homes Inc. (MHO), Vulcan Materials Company (VMC) and Meritage Homes (MTH). All these stocks carry a Zacks Rank #2 (Buy).

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Read the Full Research Report on VMC
Read the Full Research Report on MTH
Read the Full Research Report on MHO

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